Wednesday, November 14, 2007

For those of you who haven't heard, Elance is changing its membership structure. And the change is so bad that I've decided to cancel my subscription.

Before, I paid an annual fee. Now, I can only subscribe on a monthly basis. Before, my annual fee gave me 120 free bids per month. Now, my monthly fee will give me anywhere from three to 25 "connects" each month. Before, a bid was a bid was a bid. Now, lower-budget projects will cost me one "connect;" medium-sized budgets cost three, and some "featured" projects cost six or even more.

I've worked on Elance since the beginning of my writing career. When I started, it was a great way to gain experience and make connections. The transaction fees were high, there were too many dummy projects, and there was always a lowballing problem; but for me the benefits outweighed the costs. With these new changes, the benefits are dwindling and the costs are rocketing into space.

Here's why I'm leaving, and why I'm no longer recommending Elance.

It's no longer a good place for beginners to get started. When I first got started on Elance, I signed up under the cheapest plan possible. This plan gave me only a handful of free bids. I thought they would be enough at first, but I soon found that nobody wanted to hire a newbie with no feedback rating. After quickly racking up a bill for extra bids that almost doubled my subscription cost, I bought a plan with an adequate number of bids. It took me about three months of unselected bids before I landed my first project.

Now that would no longer be feasible. New providers would have to spend a great deal of money on extra "connects" before landing even one project. And that project is likely to be extremely underpaid, as you usually have to underbid everyone else to get work as a newbie provider. It might take you a year or more to make back the money you spend in "connects" landing those first few jobs.

"Connects" are costly--no matter how you look at it. Elance claims that under its new plan, prices would go down for 80% of its providers. While this may be true in some other categories--programming, administration, graphics, etc--that are more highly paid, writers get the shaft. The "writing and translation" category was cheaper than others under the old plan, but writing jobs paid much less on Elance than jobs listed in other categories. But if I paid for a plan equivalent to the one I have now under Elance's new structure, I'd pay around $1,200 per year--that's nearly four times what I pay now. And that's not including the 8.75% transaction fee Elance charges on each project. And I'll be bidding on the same low-paying jobs, for the most part; payment won't go up along with costs.

The monthly costs may be lower for some providers in some categories. I've found them to be roughly equivalent, and often a little higher, to what you'd pay for an annual plan in the writing and translation category. But that's not what makes it so expensive. What Elance's new plan does, essentially, is force providers to buy extra "connects." Their most expensive plan provides 25 free "connects" per month. A single "connect" might be worth one bid for a low-budgeted project, but for a medium-sized budget you might have to spend three. I usually bid on medium- and high-budgeted projects, so this plan would only allow me three to six bids per month.

It's no longer feasible to be the "high-quality option." My strategy on Elance was to offer professional rates for high-quality work. There were plenty of low-balling writers from third-world countries out there who were offering substandard writing for substandard rates, and a lot of buyers went with the cheap option. But there were still a handful of buyers who were looking for quality, and I tended to find one of them for every ten to twenty bids I made. I spent a lot of bids to land a single job.

Now it's just not realistic to do that. I'd have to pay extra for every bid I made, so every bid would have to count. I can't take the chance that hundreds of my bids would go unchosen to land a few projects--it just isn't financially viable.

The new system will make underbidding worse. Elance claims that by asking writers to pay more, it will squeeze out the lowballers who bid pennies on dollar projects. The idea is that these writers can't afford the new costs, so they'll leave. But I usually bid higher than most other bidders--and I can't afford the changes, either.

In reallty, I think the change will make the lowballing problem worse. Before, I could afford to spend twenty or thirty bids to land one project. Now, every bid will count--I can't afford to waste any. If I stayed, I'd be forced to lower my prices considerably in the hope that more of my bids would result in paid projects and help me recoup my losses.

Elance isn't addressing the real problems. Elance states that the reason for the change is to combat several different problems the site has been dealing with ever since I joined. One is the problem of "non-serious" bids--providers simply throwing a lowball bid on every project they find in the hopes of getting work. Some high-budget projects attract dozens of bids, not all of them serious. If each bid costs money, providers will bid more carefully.

Some buyers may get an influx of bids, but on most I've seen only a maximum of twenty or so. The bigger problem on Elance, in my experience, is dummy projects. Some buyers post projects simply to get an idea of the cost or to try to find free work. Others simply don't follow up on their projects. Today I'd say nearly half the projects I bid on never go awarded. Under the new plan, about half my "connects" would be wasted on projects never intended to be awarded at all--and Elance has no plan to reimburse writers for those "connects."

Elance essentially railroaded these changes down the throats of providers. The new change goes into effect on December 4, and I received an email about this at the beginning of the week. We didn't even get a month's notice. Even worse, many providers who renewed their memberships recently under the old plan (myself included) are seeing their old membership terms evaporate. Elance isn't being clear on its refund policy; I received notice that Elance would not be offering refunds on old memberships that have not expired, but Jon Diller, the president, did say in the forums that refunds would be available. I have a feeling that it will take a lot of phone time and arguing with sales reps before I see any money back for my membership, if I ever do.

So, for any new writers out there looking to get a start in Elance: don't do it. The new model will not be kind to you. You'll be forced to pay extra for every bid, and it'll take months to land your first feedback rating.

Here are a few other blogs that are covering the Elance changes. I'll add more to this as I find new sites; if you're a blogger and you have a post up on the Elance changes, leave a comment here and I will add you to the list.

43 comments:

James Chartrand - JCM Enterprises
said...

I have a couple of posts up about Elance's changes. So far, I haven't taken my decision. I've learned not to have knee-jerk reactions. No one can yet tell what the positive aspects of these new changes will be. Of course, there are negative aspects indeed, high cost of providing services being one of them.

You posted a comment on my blog The Hidden Writer. I'm afraid I had said that I was in favor of the new changes but after reading your post I am starting to change my mind. I hadn't fully read the changes and all I could see was the piece where Elance had stated that they were trying to cut out the rif raf. But like you said 25 connects each month for the top paying membership is nothing. I have 80 free bids per month at present and like you paid my membership annually. Now with the plan that they have suggested I would be paying almost $40 per month a lot more than before and with less bids too. I think I will choose their free plan just to keep my profile listed. I don't bid on very many projects as I have a full client list but a year or two ago Elance was my bread and butter and was always the top choice for me. I hate to think that they are changing things just for the sake of earning themselves more money. I definitely think that with the amount of freelance jobs websites out there that it will be Elance that will lose out in the end.

Thanks to you both for stopping by. James, I definitely agree that it's smart to wait a bit before making a knee-jerk decision. In my case, the math won out. I may downgrade to the free membership and keep my profile around so I won't have to start accumulating feedback from scratch if Elance ever comes to its senses.

Amanda, it certainly looks like they're money-motivated, despite their noble talk about cleaning up the marketplace. Unfortunately, they've gone overboard and will probably wind up squeezing out a lot of good providers along the way.

My post about this issue will be up tomorrow! Since I have an extensive Elance portfolio, to which I point potential clients, I'll be opting for the free membership as soon as my current time runs out.

A great place for freelancers writers is oDesk (http://www.odesk.com). Unlike other marketplace sites, oDesk does not charge any fees to join or to apply for jobs and freelancers are guaranteed payment for hourly work. We have blog writing, translation, technical writing jobs (just some examples). Browse through other oDesk jobs today: http://www.odesk.com/console/jobs/?search_button.x=1&action=Jobs&reset=1&search=Advanced&filter%5BJobCategory%5D=Writing

Jennifer-Thanks for your concise explanation about the Elance bomb. My annual membership will now cost me a minimum of $500 more to get what I've already paid for, my 80 bids per month. I'm a graphic designer, and I estimate that only 10-20% of the jobs I bid on get awarded. I can't figure out how I can get any work under the new structure if we don't get our bids back for deadbeat job postings. And the spin they're dishing out is really tiresome. Best of luck to you, and all, who relocate.

Great post, Kathy! I couldn't agree more. Rastercat: it's funny, because I kept hearing Elance say that 80% of their membership will experience lower fees under the changes. I assumed most of that 80% was in other categories besides writing, but I'm now hearing from folks like you in graphic design and a few other categories, and your prices are going up too. Wonder how they did the math on that "80%" thing.

Thank you for the comments. I have been on elance since 2003 and have been frankly confused at their strategic direction at times. I keep thinking...is elance trying to be the next ebay or the world's largest workforce? The biggest problem with elance in my opinion is that there are not enough projects for everyone. Instead of taxing the providers, why doesn't elance advertise some its services to a wider audience? Maybe they do, but I haven't seen anything. I have had many clients tell me...why don't you go off elance? 1) The reasons are these,The marketing costs are low relative to starting your own business. 2) Using the elance payment system is safter. It seems that if I work with someone who contacts me directly I have a difficult time getting paid. So, there is that security. I think the time is right for elance to begin promoting itself to a wider audience.

Then there is the whole Jessica Mah (Moh?) thing that really ticked me off.

Interesting that you brought up eBay. I was under the understanding that Elance is a sister company of eBay which may explain their strategies. I'm also considering leaving Elance. I've checked out some of their top competitors like Guru.com. Looks promising. Lower subscription fees, 100 bids per month, 5% project fees across the board and 3x as many writing projects posted. Of course, that's just from a cursory glance. Of course, I've always been an Elancer and don't have any first hand knowledge about their competitors. Has anyone else done any research? Does anyone have any first hand experience with other sites?

Hello Jennifer and Kathy,I appreciate your time on the phone today and wanted to let you know that all of your comments and requests have been communicated to the team here at Elance. I also wanted to thank you for listening as we went over the intentions to have the membership plans, and their allocated connects address issues of improving quality on Elance. We'll also be posting updates on Elance's forum, the Water Cooler within the next 12-24 hours.

As James Chartrand mentions, hopefully you'll reconsider your decision to immediately leave the Elance community, and see the effects of the upcoming changes.

Jennifer, as mentioned in your initial post, if you do decide the new membership plans are still not for you, there would be NO difficulty canceling and contacting Elance Customer Service for a refund of your remaining balance.

Heidi and Lynn, Elance is not an eBay company. We are independent. We are marketing to larger audiences and will continue to do so to grow the Elance community, both quality buyers and service providers.

Thank you all for your passion in addressing your concerns about Elance.

Lynn, I'm not sure about other bidding communities out there--I've heard from most writers that Elance is really the best out there in terms of well-paid projects posted; places like Guru have a lot of lowball projects and writers. But I'm not speaking firsthand here.

Lorenzo, thanks for calling. I appreciate your assurance about the refunds--I definitely think Elance needs to be consistent about that in your communications with providers, as I'd been getting emails that told me I could use my remaining Elance funds towards a new membership but not that refunds were an option. Hence the confusion.

I'm happy Elance is listening to the feedback they're getting, and I hope to see meaningful improvements up on the Water Cooler boards soon.

I hope all Elance (and former Elance) writers remember what has happened, no matter what concessions are given this time. It costs Elance the same amount to process projects, no matter the price, so the smaller projects writers are asked to do won't give them the same rate of return. Notice that it costs the same number of connects to be $1000.00 or $100,000.00. I have enjoyed my Elance experience. But whatever happens there, I realize I must diversify. If anyone has experience with or information about other options, maybe (if Jennifer is amenable) we could exchange information here. I have had a free membership on Guru for two years and get notified of a project or two every week. I never took the time to post a bio or samples, but I will now. The number of projects available is much lower than Elance. However, since Elance providers will be very leery of wasting a precious "connect" on a new buyer (who probably won't award the project), that may change.

Hello Lorenzo - My comment about ebay was meant to imply that I think elance is at a critical point where it needs to choose if it will be revolutionary or simply "me too." I have been on both boards, Guru and Elance, and in my opinion Elance wins hands down. It is just more professional. In general, the projects prices are not as high. My fear isn't that providers and buyers will now flock to Guru but rather another company, perhaps such as Ebay, will develop a similar site and do exstensive marketing to promote the services of providers. Before this can happen, however, a program like the proposed new select program will have to be put in place, which I think is a great change by the way. So...maybe I just answered my own question! :0)

Yes, their fees just went to the sky and I see that many of their freelancers decided to leave (now or when their subscriptions end). And I really understand them. I am thinking of leaving myself also. That’s too bad, I really liked elance.

Maybe the issue is bigger than ELance. Maybe it's about our methods of getting work.

I'm against paying in order to get job leads. I did it once, and I realized I was competing for $4/article jobs. I can do that for free just about anywhere. Frankly, until the standards are raised - meaning the caliber of jobs that are listed goes up - I don't see why we need to plunk down cash for the chance to maybe recoup it after a few low-paying jobs.

I'm a freelance graphic designer rather than a writer and I'll say frankly that the graphic design part of Elance is no better. Companies with huuuge portfolios and dozens of freelance, dirt cheap workers will underbid me all the time. The projects I DO win are extensive and I get paid crap for them. I've been on Elance for a number of years and I'm just at wits end with the 'changes' they make almost on a monthly basis that never help us providers, but rather the buyers. They cater wholeheartedly to the buyer but never back us providers up with even so much as a regard to project fees we're getting charged for deadbeat buyers. The buyers are almost all the same (with a few exceptions), they'll post a project, reject a ton of bids, then usually back out without even choosing a provider. I see this all the time - up by their name will be something like 56 projects posted, 12 rewarded!!! WTF?! Perhaps Elance should stop screwing us providers over and start backing us up by making these buyers commit to the projects they post?! In the past 6 months, I've bid on like 10 projects daily and only won 5!!! FIVE! That is nearly not enough to live on, considering I can't even win a stupid logo project for $75 because someone somewhere (usually in India) has undercut me once again for like $50 the minimum you can bid on. My work is exceptional, my portfolio is great and I can't even make ends meet on Elance. They suck!

I started this website www.handywise.com, which allows professionals to conduct advice business real-time text chat, face-to-face video chat, or thru email. I used a few services thru elance, and some of them told me a lot of the elance users are getting fed up, and trying to find an alternative. An elance marketer even told me if I want to do email marketing to promote my site to elance users. I don't like spam, so I hold off the idea. I always think elance are doing good, maybe not so anymore..

I am relatively new to eLance, and am very disappointed in the overall experience. I decided to try using the site to hire freelance work to expand the population of candidates and add more perspectives. I have had a couple quite positive experiences, and numerous very negative ones. Everything from providers bidding on work without reading the description of what they are bidding on, to delivering very shoddy work product that is not remotely close to what is shown in their portfolio or shared for examples, providers simply disappearing and now I have to go through a tedious process to recoup escrow funds, and finally providers questioning my ethics when I can not move forward with determining business terms on a project due to other providers simply not delivering.

I stopped using the service based upon the relatively low sucess rate with the providers.

I personally would gladly pay a fee to post every project, if eLance would do more to validate the providers (and the buyers) to make this a market that is focused on success. The completely open nature of the site simply brings down the overall quality of the market on both sides of the equation. This is a shame, as there are clearly some very qualfied providers

As a provider and buyer, I completely agree with your comments. Elance is in a very interesting position - where the Internet is moving from being a place where people simply connect with no strings attached to one where there is real business going on. I think Elance is trying to work its way through the future and is having a difficult time. There are a number of things the site could do, that, quite frankly, would be very simple to implement and would help the overall quality of the site. For example, require feedback before payment, make projects that are late subjected to a higher fee, etc. Now I feel like elance is basically the "wild, wild, Web." So, Annie get your gun and watch your back!

Thanks for your post, Jennifer, and everyone commenting! I couldn't quite get a grasp of the connects, and why when I'd go ti bid, some project charged more connects than others. Seemed totally chaotic. Makes more sense now -- although still a bit chaotic :)

Hello everyone,I know I've been a bit lax about responding to comments on this post--sorry about that! To get to the more recent ones:

@Both Anons: It's definitely true that from both the buyer and provider's perspective, there are a few gems on Elance--and a lot of gravel to sift through. Elance claims the changes it's making are to increase the number of both quality buyers and quality providers on the site, but it seems to be having the opposite effect--I know a lot of ethical and high quality providers have left it, myself included, because of the recent policies. If I were a buyer I'd be hesitant to use the service, based on what I know about it.

@Leilani: Use this time as an opportunity to start building a true writing business--getting away from Elance may be a blessing in disguise for you. Instead of taking crappy paid blogging jobs (and I know a lot of these pay sweat shop wages), spend time building a website, showcasing your writing online, and starting a blog. Once you've done that, start emailing or calling businesses you'd like to work with and applying for jobs online. You'll be able to point them to your professional-looking website and samples, and you'll be earning good money for your work.

@Anon: If you're using Elance now, best of luck with it--I hope your experience is more positive than it's been for many of us!

I got here accidentally. I joined elance after the structure change and I think it's a good thing. I immediately recognized the intent (or at least the mechanism) behind it. I tried to find some programming work on getafreelancer (GAF) where you get 150 bids for $12 a month with all the bad things that this system is supposed to counter act.

Every (well, most) project get a handful of incredibly cheap bids. I don't know their strategy if they try to inflate the price once they got the attantion or even the project, but this situation is bad for the buyer and the provider. The buyers get a lot of unusable bids (can do, let's start, expert on that, etc.) and they seem to be annoyed actually. (A lot of them include in the description that they won't react to generic copy&paste bids.) It's a waste of time for both the buyer and the provider.

How is it good for the provider? If a place is good for the buyer (known to deliver more meaningful bids) then the more exigent buyers (I mean ones demanding high standards and having better projects) will choose that one.

And I think it's quite evident. If you take a look at GAF there are a lot more projects that have either ridiculous budgets, are totally a joke (unspecified scope), are abandoned. That's partly because of this I think. While on elance I see a lot of projects that basically get 0 (zero!) bids.

I used to bookmark some of the ridiculous ones (low budget, no real description that's evindetly just testing the prices) and they usually never get any attention. And it's a good thing because providers are held back from wasting their own time as well.

Now only if buyers were charged more... Actually it also helps that at least you can see their non-action ratio, something that GAF also doesn't want to support.

With programming bids it's quite easy (after some practicing) to quickly filter out where you shouldn't bid, so I definitely don't need more than 20 bids a month. I would just waste my time on buyers who wouldn't take the time to read my offer just choose the cheapest guy automatically. I think that should be true for your profession as well.

hi, I also seriously thinking of leaving the elance. the major reason of this is the buyer had a very very poor rate of awarding project to provider. consider this :I also work at GAF. At GAF in 3 months i Apply for around 40-60 Projects at only 3-4 buyer canceled projects and all other awarded project to different provider including me(I won 11 project). Im happy with it as i can see that the buyers are genuine. Now at elance in past 2 months I apply for 40-60 projects. around 50 projects are closed for bidding & around 30-40 buyer are not choosing any provider(yes they are not serious buyer.)I had written to elance but they reply that they can make sure that buyer should reward at least 20% projects. 20% is a very poor rate.

I'm top100 on elance www.dcrsolutions.biz aka connects.elance.com and would like to clarify several aspects:

1. Last year Elance changed their subscription plans and got expensive by intrducing the "connects", since then I grown my business with 150%, why? so simple, quality. (avg project on me is above 3k right now)

2. If you're looking to get something done professionally and you do not have a development background, then that's the way to go; if you know programming and looking for a 100job, then rentacoder.com is the best fo you; I'd strongly suggest to avoid using sites like guru.com that encourage people submitting templated bids.

3. There is an earlier comment that encourages virtual assistance; maybe... however, I really doubt someone can tell me better how to achieve my goals, especially when that person is a marketing 3rd party with the main objective to increase market i.e. spend your money.

4. Even Elance, as the largest such business and as being in business for over 10 years, has bugs into that marketplace; it's very hard for me to believe there is some other super market super professional and without any problems; (and I do makrting all day long, not only through Elance).

We had the same terrible experience with elance and we decided to start a very basic freelancing site for newbies and providers of any professional to post and place bids.Please visit http://www.freelancelinkedin.net ,a new website for newbies.

I have read your post about Elance. I am new at Elance and I dont know how Elance before changing its policy but ket me say these new rules aren't that much bad , If there was no limit on bidding even on high budget projects you can see more than 10 buds this make employers to make a decision so hard in this way enyone bid on a project which thinks is for himself. This is my second month on Elance and I got three projects and the revenue was 50 times more than I cost on Elance. I hope I wont change my idea about this.

Thanks for your post -- I recently put together a blog/website at http://www.copywriter.co.cc in order to start more seriously looking for work online. It's good to get some perspective -- I was wary about Elance, but was thinking about using it to try to get a start. I'll definitely be exploring some of the other sites posted in the comments.

Interesting post and it is amazing how many comments that it gets years later however, I think it is because Elance is fascinating and truly the leading marketplace for online talent, unlike any other freelance site out there. I guess this is why I have been an Elancer or Elance provider for over 10 years and why I have completed over 700 projects to date - simply because the system works well.

The key to succeeding at Elance is to know your worth and be careful about the proposals you submit. You also have to know your worth and only lowball on very rare occasions (like when you're just starting, need to build a reputation, or want a repeat project). You also have to choose your buyers carefully. For instance, I always submit proposals on projects with reputable buyers who don't mind paying half down - half upon completion. I steer clear from buyers with unrealistic pocketbooks and no funding.

All this to say, qualified providers can succeed on Elance. I'm but one success story example but on Elance there are many more success stories!

The only positive factor in the change of elance is the increased number of connects for free Elancers. Before I could bid for only 3 projects but now I can bid for 10 if I want to. BUT I am on Elance and on Guru as well for over a year - to tell the truth, I improved my portfolio this year a bit - and I have not been given any projects. I am not a dummy; I have lots of samples in my portfolio, I have a website for my business, I filled every field in I could on my profile, I have experience, good qualifications, I always try to write great submissions, still I do not get any chance from buyers to show my knowledge. As I see, buyers choose providers with low bids (especially from India (why?)) or ones who paid members of the service. I will not leave elance for a while but I am sure I will not pay for them until it is worth it. Now it would be just a waste of money and I do not have so much to throw out of the window for nothing.If somebody could give better chance to get online jobs - beside the ones given before, please write to me. Thanks a lot.

It is now much cheaper than as I read in this blog, I got my first job within 2 days of signing up, all u need is quality samples. So before applying keep samples ready in all niches you wish to write in and your done, its a great place to work

I see where you are coming from. I also have similar complains regarding Elance. However, there is one way you can exploit their system. I utilize a method that not only saves me $20 but also gives me 180 free connects every year! Here is the URL for my post: http://www.howtostartfreelance.com/how-to-get-free-connects-on-elance/I would be happy to do a blog post as well on your blog regarding this.

I'm Jennifer, owner of Catalyst Writing Services. I've been writing for businesses, nonprofits, and online publications for over six years, and I started CatalystBlogger to share my writing and marketing expertise with clients and colleagues alike. To contact me, send an email to Jennifer@catalystwriters.com.